In a preliminary ruling of extreme significance on 22 November 2022, the European Court of Justice (the “Court”) has rendered the provision of the Anti-money laundering directive (the “AML Directive”) providing for beneficial ownership information on the UBO registers to be made available to the public, invalid.
In particular, the Court has ruled that the general public’s access to the information of the beneficial owners constitutes a “serious interference with the fundamental rights to respect for private life and to the protection of personal data” safeguarded by Articles 7 and 8 of the Charter of Fundamental Rights of the European Union.
Although the objective of the AML Directive is an objective of general interest, namely, to prevent money laundering and terrorist financing by requiring increased transparency, it is not proportionate to the interference entailed by it. On the contrary, the Court has ruled that its interference is “neither limited to what it strictly necessary, nor proportionate to the objective pursued” therefore creating a considerably more serious interference with the fundamental rights affected.
Furthermore, the Court has ruled that even though the AML Directive provides Member States with the option to require registration for access to the relevant information, or to allow for very specific exemptions, this does not demonstrate the existence of sufficient safeguards, nor does it create a proper balance between the objective and the fundamental rights affected.
The judgement is likely to have an impact beyond the EU to include the UK. The UK was the first country to introduce public registers of beneficial ownership for UK companies and partnerships in 2016, as well as, in March 2022, the public register of overseas entities holding property in the UK. The EU’s response and approach to the specific judgment will have a great impact on future actions by the Member States where fundamental rights are at stake.
For more information please speak with Kyriaki Stinga, Adonis Zachariou or your usual contact at Elias Neocleous & Co LLC.